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(Alliance News) - The latest bout of vaccine enthusiasm, driven by Moderna, faded on Tuesday with the FTSE 100 shedding more than 75 points at midday.
Travel stocks, which rallied on Monday's vaccine hope, gave back some gains on Tuesday, with news of airline easyJet's first loss in its 25-year history further denting the investor mood on the sector.
The FTSE 100 index was down 76.58 points, or 1.2%, at 6,344.71 Tuesday midday. The mid-cap FTSE 250 index was down 184.85 points, or 0.9%, at 19,423.20. The AIM All-Share index was up 0.6% at 1,013.39.
The Cboe UK 100 index was down 1.4% at 631.66. The Cboe 250 was down 0.8% at 16,823.22, and the Cboe Small Companies up 0.6% at 10,993.91.
In mainland Europe, the CAC 40 in Paris was down 0.4% and the DAX 30 in Frankfurt down 0.5% Tuesday afternoon.
"The rally has stalled across Europe, pausing for breath after the huge gains of the past week that have been driven by positive vaccine news," said Chris Beauchamp, chief market analyst at IG.
European stocks surged on Monday after US biotech firm Moderna released early results from a clinical trial with more than 30,000 participants, showing its vaccine was 94.5% effective. This came a week after fellow US pharmaceutical company Pfizer and its German partner BioNTech said their vaccine has proven 90% effective.
However, markets slipped back on Tuesday as investors took stock of the current virus landscape. Globally, infections have neared 55 million with more than 1.3 million deaths, and experts caution there are still difficult and dangerous months ahead.
More than 68,000 deaths involving Covid-19 have now occurred in the UK, new figures from the Office for National Statistics showed. This is up from 65,000 a week ago. The number of Covid-19 deaths registered each week in England and Wales also is at its highest since late May.
UK Health Secretary Matt Hancock was unable to rule out an extension to the lockdown as a health chief warned the tiered system that ministers want England to return to may have to be strengthened.
Hancock said it was "too early for us to know" whether coronavirus cases will be brought down sufficiently to ease the second shutdown on December 2.
Boris Johnson hopes the nation will return to local restrictions, but Public Health England's Susan Hopkins – standing alongside Hancock at the Downing Street press conference on Monday – said the lowest tier of earlier measures had had "little effect".
Communities Secretary Robert Jenrick said on Tuesday that ministers want to see a "significant easing" of coronavirus controls when the lockdown in England is lifted in December, but suggested tighter controls may be needed in the top Tier 3.
IG's Beauchamp said: "Overall the atmosphere is still positive but as the euphoria about possible routes out of the crisis begins to fade the focus will shift, to a degree at least, to the manufacture and distribution of the vaccines. Neither of these things is likely any time soon, leaving investors to worry how much further the second wave will spread and how bad things could actually get over the course of the winter."
In the US, Wall Street is on track for a mostly lower start. The Dow Jones and S&P 500 are seen down 0.3% and 0.4%, respectively, while the Nasdaq Composite is set to rise 0.2%.
Higher in New York pre-market was electric carmaker Tesla, shares rallying 12% after qualifying for the prestigious S&P 500. The California-based automaker will join the broad-based market index on December 21, S&P Dow Jones Indices announced Monday, prompting another wave of affection for Tesla stock.
In London, jet engine maker Rolls-Royce was the worst performer in the FTSE 100, down 3.3% at midday. British Airways-parent International Consolidated Airlines fell 2.6%.
"Travel-related stocks eased back, perhaps as investors took profits following recent gains and following easyJet's gloomy outlook where it didn't feel confident enough giving earnings guidance for 2021," said AJ Bell's Russ Mould.
In the FTSE 250, easyJet fell 2.8% after the pandemic pushed the low-cost airline to its first ever annual loss.
Total revenue in the financial year to the end of September fell 53% to GBP3.01 billion, with passenger numbers down 50% to 48.1 million. The low-cost airline swung to a pretax loss of GBP1.27 billion from a profit of GBP430 million the year before.
easyJet grounded its entire fleet for 11 weeks during the national lockdowns seen in the spring to early summer.
"Whilst there was some recovery in demand as travel restrictions eased during the summer, widespread quarantine measures introduced in September once again eroded demand and consumer confidence to travel," the air carrier noted.
Based on current travel restrictions, easyJet expects to fly no more than 20% of planned capacity for the first quarter of its new financial year.
"At this stage, given the continued level of short-term uncertainty, it would not be appropriate to provide any further financial guidance for the 2021 financial year," the company said.
Mid-cap tourism operator TUI was down 1.9% at midday, while Irish budget airline Ryanair was down 2.0%.
Returning to the FTSE 100, Imperial Brands was the top performer, up 6.3% as it looked towards a stronger 2021.
The smoking and vaping company said revenue in the financial year to September 30 rose 3.1% to GBP32.56 billion, and pretax profit increased 28% to GBP2.17 billion from GBP1.69 billion.
"Although this has been a difficult year, the resilience of our tobacco business and the measures we have taken to improve our [Next Generation Products] operations reinforce my confidence in the future potential of the business. With a more disciplined focus and better execution we can realise significant value for our stakeholders over time," said Chief Executive Stefan Bomhard.
Following the "difficult" year, Imperial expects to deliver a stronger financial performance in the 2021 financial year. This includes low to mid-single digit growth in organic adjusted operating profit, at constant currency, excluding the impact of the disposal of the Premium Cigar business.
Intermediate Capital Group rose 5.4% after the asset manager raised its payout and reported profit growth of nearly a third during a strong first-half.
Assets under management at September 30 were EUR46.10 billion, a 1.8% improvement from EUR45.30 billion at the end of March and a 12% leap year-on-year. Intermediate Capital noted it raised EUR2.6 billion in new money during the period.
Pretax profit in the six months to September 30 jumped 29% annually to GBP197.8 million from GBP153.4 million.
Sterling was quoted at USD1.3266, higher than USD1.3186 at the London equities close on Monday. The euro traded at USD1.1885 midday Tuesday in London, higher than USD1.1840 late Monday. Against the yen, the dollar weakened to JPY104.19 versus JPY104.57.
Gold was quoted at USD1,888.55 an ounce midday Tuesday, lower than USD1,889.70 on Monday. Brent oil was trading at USD43.76 a barrel, down on USD44.40 late Monday in London.
By Lucy Heming; lucyheming@alliancenews.com
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